Putting aside savings is self-evidently a good thing. However, for many people sparing money out of their budget to put aside as savings is easier said than done – at least without buying nothing but essentials and never treating themselves at all.
Whether you have a little or a left of each paycheque, saving effectively is a matter of good habits. If you want to put money aside for the future or simply build up an emergency fund, here are a few savings practices you should try to cultivate in order to get the best results.
One of the best habits you can develop is also one of the simplest; make saving into something you always do. Just before or after each paycheque comes through, put whatever is left in your bank account from your previous payday into a savings account (barring a little to cover casual expenses if you choose to do this before your next month’s income actually comes through). Even if this is sometimes a matter of pennies, you should still do it. That way, saving becomes habitual and it will seem only natural for you to carry on the same strict habits in times when you have more to put aside. It also helps you to maximise compound interest in order to make the most of whatever you can put away.
Keep an Eye on Your Spending
Sticking to a specific budget for living is all very well in theory, but it often proves too restrictive in practice. Instead, you should try to make a spending plan or simply keep an eye on what your outgoings are. This will help you identify areas of spending that are simply unnecessary and places where you wouldn’t mind cutting back, meaning that you have that bit extra left for your savings every month. Over time, even a little boost can build up. £10 per month becomes an extra £120 in your bank account by the end of the year.
Put Windfalls into Savings
If you come into a windfall, even a small one, then don’t shove it in your current account to be casually used up or immediately start planning what to spend it on. Consider putting it into your savings instead in case you have need of it in the future. As well as one-off windfalls, this principle works well with things which give you small, occasional payouts outside the income on which you live. For example, if you use cashback websites and occasionally withdraw your funds when you have built up £20 or so, consider putting all of those £20 payments into a savings account instead of your current account.